Today, when the Dow Jones Industrial Average closed over 11,000, I started thinking more deeply about the “numbers” the economists were spitting out and wondering how they compare to 2008. President Obama has had about 14 months to begin to resolve what is becoming known as “The Great Recession.” To be fair, President Bush got the ball rolling by creating the TARP program and releasing an additional $350 billion in TARP funds to be ready for President Obama. This largely prevented a run on the banks and prevented the recession from getting much worse. So, has any of it worked? I’m no economist, so I’ll give a simple look at the numbers. I’ll leave the deep analysis to Paul Krugman.
The following statistics are from the Bureau of Labor Statistics:
Unemployment: In Jan, 2009 it was 7.7%. Today, it’s 9.7%.
Average Hourly Earnings: In Jan, 2009 it was $22.01. Today, it’s $22.47. This is just about double the pace of a 12 month inflation rate of just over 1%.
We all know that unemployment is a lagging indicator of economic recovery. Generally, if employers feel the economy is improving, unemployment will start to go down, generating more economic activity. If they feel the worst is yet to come, they’ll hunker down and cease hiring, thus making unemployment go up.
The questions are: Why do employers feel the worst is yet to come? Is that why unemployment is so high? Why is the DOW going up and unemployment not going down, or stagnating at a ridiculously high number? Why is GDP going up when unemployment isn’t going down? How can the President provide confidence to business that economic recovery is well on the way and they can begin to hire again? Obviously he’s provided stimulative recovery aid – to provide confidence the President needs to take back control of the economic message. Stop letting the fearmongers tell people that the positive signs of recovery are because of silly things like census hiring and get out in front of the press and tell people how it is.
I’ve presented a lot of questions I’ll admittedly not be able to answer. I’d like your opinions. I’ll even throw a bonus discussion out:
Will the health care bill provide increased employee mobility, therefore increasing innovation and economic growth? I say yes, as people will be able to leave their safe jobs and have more portable access to affordable health care if they decide to go out on their own and take on more personal risk to further an entreprenurial endeavor.